Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/55256

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DC Field

Value

Language

dc.contributor.author

Gürtler, Marc

en_US

dc.contributor.author

Sieg, Gernot

en_US

dc.date.accessioned

2012-02-08

en_US

dc.date.accessioned

2012-02-10T15:39:09Z

-

dc.date.available

2012-02-10T15:39:09Z

-

dc.date.issued

2006

en_US

dc.identifier.uri

http://hdl.handle.net/10419/55256

-

dc.description.abstract

We are considering for examination an Irreversible Investment under Uncertainty, subsidized by the government. If the government announces the termination of a form of subsidization, investors may decide to realize their investment in order to obtain the subsidy. These investors might have postponed an investment if future payment were assured. Depending on the degree of uncertainty and the time preference, the termination of said subsidy may cost the government more in toto than granting the subsidy on a continuing basis. We would like to show that a better strategy is to cut the subsidy in parts rather than terminate the subsidy in its entirety.